GENERAL COMMENTS:
Weakness developed Tuesday as nearly all livestock markets posted moderate to aggressive losses. The overall lack of support in the complex continues to add concern that further weakness will develop in early September as traders head toward the long Labor Day weekend. Following contract highs in live cattle and feeder cattle futures during the month of August, some traders also focused on adjusting positions on the last day of the month. Hog prices moved higher on the National Direct Afternoon Hog Report in moderate trade, added $2.23 with a weighted average of $92.95 on 9,034 head. December corn is down 8 1/2 cents per bushel and December soybean meal is down $1.60 per ton. The Dow Jones Industrial Average is down 42 points and NASDAQ is down 11 points.
LIVE CATTLE:
Active pressure developed across the live cattle complex with August through December futures posting the most aggressive losses, each closing with triple-digit price reductions. The early pressure in grain trade quickly set the tone for a bearish overall commodity market. August live cattle futures posted strong early day gains as the few traders still in the market tried to get out of current commitments. Once this flurry of activity cleared the market, all nearby contracts posted losses of $1 to $1.42 per cwt. After setting new contract highs last week, traders backed away from previous gains, with Tuesday's close enough to establish August lows in the October contracts. Even though long-term technical triggers have not yet been hit, traders are going into the month of September with concerns that market pressure may continue. August live cattle closed $1.30 lower at $118.95, October live cattle closed $1.42 lower at $126.90, and December live cattle closed $1.20 lower at $133.47. Cash cattle trade is very quiet Tuesday afternoon with packer interest still limited. The underlying pressure in futures trade is leaving packers with no sense of urgency to step back into the market. This could keep most trade developing in the last half of the week, although, at this point, it is expected that both sides would rather be done earlier than later due to the holiday weekend. Asking prices are still relatively quiet also with live cattle in the South priced at $125 and higher, although limited interest in the North has been seen from feeders.
Tuesday's slaughter is estimated at 121,000 head, 1,000 more than a week ago and steady with a year ago.
Boxed beef prices closed lower: choice down $0.67 ($342.11) and select down $0.52 ($312.53) with a movement of 89 loads (43.51 loads of choice, 15.67 loads of select, 15.59 loads of trim and 11.08 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Steady. More interest from packers is expected to slowly develop Wednesday morning, although, at this point, it is uncertain just how many cattle packers need to buy for the next two weeks. Given that delayed deliveries have been seen in many negotiated trade deals over the last several weeks, packers may still be focusing on long-term market direction and unwilling to chase prices higher.
FEEDER CATTLE:
Unlike early week trade when feeder cattle were supported by lower grain markets, the universal pressure in most commodity markets and strong downward shift in live cattle trade left nearby and deferred feeder cattle unsupported Tuesday afternoon. This overall weakness in the complex is creating some additional concern that increased pressure may develop during early September, leaving traders focusing on squaring positions on the last day of August. Nearby futures have lost more than $3 per cwt over the last week, although prices are still nowhere near the level where technical or fundamental support levels will be tested. September feeders closed $1.05 lower at $163.00 October feeders closed $1.20 lower at $167.75 and November feeders closed $0.87 lower at $169.65. The CME Feeder Cattle Index for Aug. 30: $159.54, down 0.02.
LEAN HOGS:
Active late month selling pressure developed in lean hog futures, creating uniform pressure across the livestock complex. October futures led the market lower with triple-digit losses seen most of the session as traders are not only adjusting positions ahead of the holiday weekend and month end, but also are concerned about the wide market shifts in pork and cash hog values. This could limit further short-term market support in both nearby and deferred lean hog contracts. October lean hogs closed $1.35 lower at $88.80, December lean hogs closed $0.77 lower at $81.95, and February lean hog futures closed $0.35 lower at $83.40. Pork prices posted narrow losses with moderate weakness seen in several pork cuts. Pork cutouts totaled 357.66 loads with 324.69 loads of pork cutouts and 32.98 loads of trim. Pork cutout values: down $0.71, $109.01. Tuesday's slaughter is estimated at 479,000 head, 5,000 head above a week ago and up 11,000 from a year ago. The CME Lean Hog Index for Aug. 30: up $0.23, $103.72.
WEDNESDAY'S CASH HOG CALL: Steady. Price shifts are likely to remain moderate through the rest of the week with packers focusing on reduced procurement levels surrounding the holiday weekend.
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